Ditch the discounts-harvard business review

1. Ditch the Discounts

2. How smart companies use
adaptive pricing to ride
out the recession and
reprice for recovery.

3. TheGreatPizzaWar
$5.99fortwotopping
pizzas
$10foralargepizzawith
unlimitedtoppings
Duringrecession

4. Companies competed with one another by chalking out
heavy discounts to improve sales and attract recession weary
consumers.

6. Yetwhydiscountisanunfortunatemovebya
company?

7. • Across-the-board price cuts reduces profits
• Deep discounts devalue a product or service
• It limits the company’s abilities to raise prices as economy
improves
• The hassle to introduce higher quality, higher priced versions
of regular products to attract customers after offering heavy
discounts

8. Petrol in India
Price Drop Price Hike

9. Adaptivepricing
Different customers have different needs and place
different values on a product or service.

10. Keytoadaptivepricing
• Price like colour or style is one of a product’s attributes.
• Adjust the attributes to appeal to customers without dropping the
price.
• Sell through different channels.

11. Attribute is flavour.

12. Versioning
• Offering “good", "better” and “best” varieties of the same
products.
• Worked best for companies with weak demand.
• Powerful magnet for price-sensitive customers.

13. Aimed at health
conscious
customers who
want low fat
,sugar free and
probiotic ice-
cream.
Aimed at price conscious
consumers with basic
flavours.
Amul’s expensive and
superior quality ice-
cream.

14. Nano launched by Tata aims at price
sensitive customers who wanted an
affordable car by reducing manufacturing
costs.It is the most basic car launched by
the company.

15. Howtopriceinarecession

16. Introduce lower-priced versions
Aimed at budget shoppers who wanted quality but didn’t
want to pay for premium prices.

17. Use promotions to avoid price drops

18. Adapt products to maintain affordability

19. Unbundle services and add extra fees
Fees charged for reservation, meals and luggage.
Attract price sensitive consumers with low prices
Earn high profits from premium travellers.

20. How to price in a recovery?

21. Withdraw recession-pricing tactics
Introduce new premium products
Increase the price of regular products
Increase the price of regular products

22. Creative financing
Best method to hold
line on prices.

23. Pricing is not just about “increasing” or “decreasing”
Learning to implement adaptive pricing will lead to new customers and
improved sales.